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Minsheng Bank recorded a net profit of RMB29,618 million in the first half of the year

Hong Kong, 30 August 2018 - China Minsheng Banking Corp., Ltd. (A Share Stock Code: 600016; H Share Stock Code: 01988; USD Offshore Preference Shares Stock Code: 04609; herein referred to as the “Company” or “Minsheng Bank”) announced the interim results for 2018. In the first half of 2018, net profit attributable to equity shareholders of the parent company of the Minsheng Bank Group (including Minsheng Bank and its subsidiaries) amounted to RMB29,618 million, representing an increase of RMB1,530 million, or 5.45%, as compared with the corresponding period of the previous year.

In the first half of 2018, Minsheng Bank took proactive measures in coping with the adjustments and changes in the internal and external operating environment. According to the three major strategic positionings of becoming “a bank for the non-state-owned enterprises (NSOEs), a fintech-based bank and a bank of comprehensive services”, implementation of reform and transform policies has achieved preliminary results. Risk management and control and operation compliance has been strengthened, quality of assets has maintained generally stable and profitability has risen steadily. The operation of all business lines has achieved healthy and stable development.

Steady Increase in Profitability

In the first half of 2018, Minsheng Bank Group recorded net profit attributable to equity shareholders of the Company of RMB29,618 million, representing an increase of RMB1,530 million, or 5.45%, as compared with the corresponding period of the previous year. Annualised return on weighted average equity and annualised return on average assets were 15.81% and 1.00%, respectively. Basic earnings per share was RMB0.68, increased by RMB0.04 as compared with the corresponding period of the previous year. Net assets per share attributable to ordinary shareholders of the Company was RMB8.84, increased by RMB0.41 as compared with the end of the previous year.

In the first half of 2018, operating income of Minsheng Bank Group amounted to RMB74,287 million, representing an increase of RMB4,383 million, or 6.27%, as compared with the corresponding period of the previous year. The capability of refined management of cost has been continuously enhanced. Significant progress has been achieved in cost reduction and operation efficiency. Cost-to-income ratio was 24.35%, representing a decrease of 0.77 percentage point as compared with the corresponding period of the previous year.

As at the end of June 2018, the total assets of the Minsheng Bank Group amounted to RMB6,061,143 million, representing an increase of RMB159,057 million, or 2.69%, as compared with the end of the previous year. The outstanding balance of loans amounted to RMB3,052,658 million, representing an increase of RMB248,351 million or 8.86% as compared with the end of the previous year. Total liabilities amounted to RMB5,653,299 million, representing an increase of RMB141,025 million, or 2.56%, as compared with the end of the previous year. The balance of savings deposits amounted to RMB3,157,881 million, representing an increase of RMB191,570 million or 6.46% as compared with the end of the previous year.

In the first half of 2018, Minsheng Bank took initiative to adjust business operation strategies to continue its optimisation of business structure and achieved significant results. For assets business, the percentage of outstanding balance of total loans (including discounted bills) of the Minsheng Bank Group in the total assets was 50.36%, increased by 2.85 percentage points as compared with the end of the previous year. Loans to small and micro enterprises was RMB406,604 million, representing an increase of RMB33,342 million, or 8.93%, as compared with the end of the previous year. For liability business, the percentage of deposits balance in the total liabilities of the Minsheng Bank Group was 55.86%, representing an increase of 2.05 percentage points as compared with the end of the previous year. The proportion of personal deposits was 17.81%, representing an increase of 1.22 percentage points as compared with the end of the previous year.

Minsheng Bank continued to improve its internal compliance mechanism. Collection and disposal of non-performing assets were enhanced and asset quality remained generally stable. As at the end of June 2018, the non-performing loan (NPL) ratio of Minsheng Bank Group was 1.72%, representing an increase of 0.01 percentage point as compared with the end of the previous year. The allowance to NPLs and the allowance to total loans were 162.74% and 2.81%, representing an increase of 7.13 percentage points and 0.15 percentage point as compared with the end of the previous year, respectively.

Full Implementation of Reform

In the first half of 2018, Minsheng Bank has formulated and announced the Overall Implementation Scheme for Reform and Transformation and the Three-Year Development Plan (《改革轉型暨三年發展規劃整體實施方案》) which further clarified strategic positioning and development to activate reform and transformation comprehensively. The development of various businesses was sound.

1. Strengthening corporate finance business. Minsheng Bank has implemented strategies to support NSOEs. The Company has been striving to form an integrated finance services mechanism to promote the transformation of business model of the Company to efficiency improvement. As at the end of June 2018, the balance of corporate deposits of Minsheng Bank amounted to RMB2,563,658 million, representing an increase of RMB128,911 million, or 5.29%, as compared with the end of the previous year. The number of domestic corporate customers with deposits of the Company increased by 79.8 thousand, or 7.88%, to 1,092.6 thousand as compared with the end of the previous year. The outstanding balance of corporate loans amounted to RMB1,877,516 million, representing an increase of RMB177,820 million, or 10.46%, as compared with the end of the previous year.

2. Expanding retail finance business. Minsheng Bank focused on the development of three groups of featured retail customers, “NSOE customers, small and micro customers and private bank entrepreneur customers”, and to advance the development of online and scenerised financial services, which achieved significant results. As at the end of June 2018, the number of retail customers with deposits was 36,356.2 thousand, representing an increase of 1,752.8 thousand as compared with the end of the previous year. Financial assets of individual customers under management amounted to RMB1,578,087 million, representing an increase of RMB141,727 million as compared with the end of the previous year. Retail deposits (including deposits of small and micro enterprises) amounted to RMB631,418 million, representing an increase of RMB80,258 million as compared with the end of the previous year. Retail loans amounted to RMB1,159,172 million, representing an increase of RMB70,254 million as compared with the end of the previous year. Balance of total financial assets of private banking customers managed by the Company amounted to RMB332,287 million, representing an increase of RMB25,408 million as compared with the end of the previous year.

3. Optimising financial markets business. Minsheng Bank enhanced its interbank customers business and optimised interbank liability structure. 315 interbank negotiable certificates of deposit (IBNCDs) amounting to RMB596,270 million were issued in the first half of 2018, representing an increase of 74.18% as compared with the corresponding period of the previous year. Minsheng Bank advanced the transformation of asset management product and business model orderly. As at the end of June 2018, the existing scale of wealth management products amounted to RMB1.39 trillion. Minsheng Bank facilitated the development of comprehensive financial custody services and financial custody business developed steadily. As at the end of June 2018, assets under custody amounted to RMB8.22 trillion. The trading volume of precious metals and foreign exchange continued to increase.

4. Promoting Internet finance business. Minsheng Bank has fully applied emerging fintech to actively explore new development model of Internet financing. It also upgraded its Internet finance platform and maintained its leading position in terms of market share. As at the end of June 2018, the number of direct banking customers reached 15,114.7 thousand with financial assets of RMB147,976 million under the Company’s management, representing an increase of 4,200.2 thousand and RMB43,230 million as compared with the end of the previous year, respectively. The number of personal e-banking customers reached 42,837.5 thousand, representing an increase of 4,425.6 thousand as compared with the end of the previous year. The number of transactions in the first half of 2018 was 1,254 million with transaction amount of RMB8.6 trillion. Minsheng Bank ranked top in the banking industry in terms of transaction activities of customers.

5. Refining integrated operation. Minsheng Bank has facilitated the establishment of overseas branches and capitalised on offshore business platform effectively. It also enhanced cross-border financial services to continuously strengthen its international competitiveness and influence. In the first half of 2018, the net profit of the Hong Kong Branch amounted to RMB677 million, representing an increase of 26.54% as compared with the corresponding period of the previous year. The net profit of CMBC International Holdings Limited (“CMBC International”) amounted to RMB135 million, representing an increase of 75.32% as compared with the corresponding period of the previous year.

Six Major Achievements

In the first half of 2018, Minsheng Bank implemented its reform and transformation and supported supply-side structural reform. Minsheng Bank also effectively supported the development of real economy and the results gradually emerged. The six major achievements were as follows:

1. Minsheng Bank accelerated its implementation of reform and transformation. In the first half of 2018, Minsheng Bank activated reform and transformation comprehensively and deployed its three major innovative businesses, three principal businesses and five major business segments. Its deployment includes strengthening three primary businesses, namely direct banking, small business finance and investment banking; optimising three leading businesses, namely credit card, supply chain finance and asset management; and enhancing five major business segments, namely corporate finance, retail finance, financial markets, Internet finance and comprehensive operation. Minsheng Bank has established ten protection mechanisms which cover areas such as risk, technology, cross-selling and centralised operation. It has committed to becoming a benchmark bank with distinctive features, increased value and continuous innovation.

2. Minsheng Bank further enhanced its distinctive competitiveness. In respect of corporate banking business, it focused on NSOEs and positioned itself as “a scenarised transaction bank, a customised investment bank, a convenient online bank and a comprehensive wealth management bank”. Minsheng Bank expanded the customer base of NSOEs and further enhanced its capability to serve NSOEs, striving to become a host bank for quality NSOEs. In respect of retail banking business, based on the “ecosystem of NSOEs”, the Company has developed its three featured core customer bases. It provided efficient and quality services with human touch and insight for NSOEs and entrepreneurs.

3. Minsheng Bank continued to optimise the structure of its assets and liabilities. It strove to increase deposits based on the requirements of the new asset management regulations and optimised the structure of its assets and liabilities to reduce pressures on its capital. Efficient capital strategies, scientific pricing strategies and prudent liquidity strategies were formulated. It further optimised the allocation of assets, liabilities and financial resources.

4. Minsheng Bank implemented various effective risk management. A risk management system was developed to accommodate, lead, promote and protect business development, which reshaped the risk culture. Minsheng Bank established an internal control and compliance mechanism with various hierarchies and continuously optimised duties of the internal control and compliance department, legal affairs department and audit department. It improved its risk management measures to support strategic business development and further enhanced the management and control of liquidity risk, market risk, operational risk, compliance risk and reputation risk.

5. Minsheng Bank achieved good advancement of major businesses. In respect of corporate finance, it has implemented strategies to support NSOEs and customer base has expanded gradually. Minsheng Bank continued to upgrade the digital services of transaction bank and strengthened the capital market business of investment bank. In respect of retail finance, the wealth management business sped up its transformation, small business finance grew steadily and the results of restructuring of the customer base of credit cards were significant. In respect of financial markets, Minsheng Bank advanced the transformation of asset management orderly, custody business  developed steadily and bill business model saw preliminary results. In respect of Internet finance, the development of platform continued to be optimised. The Internet finance business grew rapidly and the direct banking business remained its leading position in the banking industry.

6. Minsheng Bank significantly enhanced its management capability. The level of refined financial management has been continuously improved. Significant progress has been achieved in cost reduction and operation efficiency. It continued to develop intelligent channels to strengthen the management of channels and adhered to strategic needs as well as improved the human resources management. Minsheng Bank has operated its businesses according to the laws and enhanced its compliance level. It promoted the operation reform and supported its strategic business.

Looking forward, Minsheng Bank will pursue to serve the real economy, prevent and defuse financial risks and deepen the three major tasks of financial reform. Minsheng Bank will insist on sound operation, promote reform and transformation, accelerate structural adjustment, develop new sources of profit growth, strengthen its risk prevention and control abilities and consolidate its management foundation to achieve sustainable and healthy development.

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